Amazon, Flipkart to see losses rise due to new e-commerce FDI policy; Walmart says optimistic despite changes in regulations

Following the implementation of the revised foreign direct investment (FDI) policy norms for e-commerce firms, Amazon India and Flipkart are likely to see their losses spike, said a media report.
The losses for Amazon may double in three years, while Walmart could see an incremental loss of $280 million from Flipkart by the year-end, The Times of India reported citing analyst reports from Morgan Stanley.
JP Morgan has also said that Amazon's total India revenue will come down to about $5.3 billion at the end of March 2020 due to the new FDI policy, the newspaper added.
On Wednesday, Walmart, which invested $16 billion in Flipkart in August last year, said it is committed to the Indian market and is optimistic despite recent changes in the FDI policy for e-commerce firms in the country.
The Bentonville-based retailing major's statement came after a recent report by global consultancy firm Morgan Stanley, which had hinted that Walmart may quit Flipkart as the new foreign direct investment (FDI) policy came into effect, which would lower its profitability in the long run.
Morgan Stanley, in a report titled 'Assessing Flipkart Risk to Walmart EPS' dated 4 February, claimed that "an exit is likely, not completely out of the question, with the Indian e-commerce market becoming more complicated."
"Walmart's and Flipkart's commitment to India is deep and long term. Despite the recent changes in regulations, we remain optimistic about the country," said Dirk Van den Berghe, Executive Vice President and Regional CEO Walmart Asia and Canada.
He further added, "We will continue to focus on serving customers, creating sustained economic growth and bringing sustainable benefits to the country, including employment generation, supporting small businesses and farmers, and growing Indian exports to Walmart's global markets."
Flipkart CEO Kalyan Krishnamurthy too refuted the claim of a Morgan Stanley report. "The report couldn't be further than the truth. Walmart remains extremely confident about the potential of the Indian market and in Flipkart's ability to lead the e-commerce space," Krishnamurthy was quoted as saying by Business Standard in an internal communication to its employees.
Tightening norms for e-commerce firms having foreign investment, the government, from 1 February, barred online marketplaces like Flipkart and Amazon from selling products of companies where they hold stakes and banned exclusive marketing arrangements that could influence product price.
The revised policy on FDI in online retail, issued by the commerce and industry ministry, also said that these firms have to offer equal services or facilities to all its vendors without discrimination.Shoot